Reporting Pass-Through Entity Withholding Tax on Form 502

02 Mar 2012 3:35 PM | Anonymous

As a general rule, pass-through entities are required to withhold tax on the Virginia taxable income they pass through to their nonresident owners.  The Department of Taxation offers the following tips for reporting the tax on Form 502:

  • Keep in mind that the tax payment for 2011 is due on April 16, 2012, even if the entity takes advantage of the automatic six-month filing extension for its Form 502.

  • The tax is reported and reconciled on page 2, Section 1, of Form 502.

  • On line 1, enter the total tax actually withheld for nonresident owners.  Do not include tax amounts that would have been withheld for owners who are exempt from the withholding requirement, or personal estimated tax payments made by the owners themselves.

  • Line 2 must be completed if the Form 502 is being filed after April 16.  Use this line to report the tax that was paid prior to filing Form 502.

  • Line 3 will reflect an overpayment if the payment amount on line 2 is greater than the tax liability reported on line 1.  If line 2 is less than line 1, enter the balance of tax due on line 4.

  • If the return is filed after April 16 and the amount of tax due reported on line 4 represents more than 10 percent of the total tax liability reported on line 1, the entity may be subject to a penalty.
For complete information on the withholding requirements for pass-through entities, see the instructions for Form 502 on our website.
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